I wanted to talk about your business model – and the money that you charge for your services.
If you’re a “standard” accounting firm, I bet your business model can be broken into the following steps:
– Complete a service
– Charge for the hours that you’ve worked
If you answered with a firm yes, then it’s likely that you’ve trapped yourself in a transactional relationship.
Naturally, that’s what most accounting firms do.
But you don’t want to be like most other accountants, do you?
Unfortunately, if you base your business on the above model, your clients will see you as just another service provider. If your hourly rate becomes too expensive, they’ll go look for someone else.
Not to mention that a fixed hourly rate doesn’t leave you enough room for increasing your margins.
Of course, there are other – better – pricing structures which you should implement. But, before you do that, let’s start with increasing your charge rates.
Now, this may sound confusing – first I told you that hourly rates are bad, and now I’m asking you to increase them?
The reason for that is – if you want to make big changes to your business, you need to implement them with baby steps. That way you can prepare your existing clients for them.
For example, let’s say that you charge 8,000 hours at $200/h. Increasing it by 15% to $230, will add an extra $240,000 to your yearly revenue.
Sounds like a lot? Yes, but that’s because we look at the whole 8,000 hours. However, the majority of your clients won’t even notice – and you’re already making more without any changes to your business model.
Naturally, a few of your clients might not like it. That’s why we’re going to start adding some services that can offer even more value to your clients. This will make them happier and make it easier to keep them in the long run.
Whatever services you choose, the great thing about this approach is that you can slightly increase your hourly charge rate with every service.
Of course, this is just the core step – and a test which of your clients you should keep.